Core Points - ItsEasy.com Passport & Visa Services and Telos Corporation have announced pop-up TSA PreCheck enrollment events in New York City from March 25 to March 29, 2025 [1][2] - The events will take place at the MetLife Building and Rockefeller Center, providing convenient access for travelers [2][4] - This partnership aims to enhance customer travel experiences by simplifying the enrollment process for TSA PreCheck [2][4] Company Overview - ItsEasy.com has processed over 2 million passport and visa applications and has been a trusted agent of the US Department of State since 1976 [8] - The company specializes in expediting passport and visa processes, ensuring compliance with governmental requirements [8] - Telos Corporation (NASDAQ:TLS) provides cybersecurity solutions and is an authorized TSA PreCheck enrollment provider [9] Event Details - The TSA PreCheck enrollment event hours are as follows: - March 25: 7:30 a.m. – 5:30 p.m. - March 26: 9:30 a.m. – 7:30 p.m. - March 27: 9:30 a.m. – 7:30 p.m. - March 28: 7:30 a.m. – 5:30 p.m. - March 29: 8:00 a.m. – 5:00 p.m. [2] TSA PreCheck Program - TSA PreCheck is a Trusted Traveler program that allows expedited screening for enrolled travelers at over 200 airports with participation from 90+ airlines [6] - Since its launch in December 2013, the program has grown to over 19 million active members [6]

Company Overview - Telos (TLS) is a US-based company that has been operating for approximately 56 years, specializing in IT and cybersecurity solutions primarily for enterprise and government clients [1]. Clientele - One of the notable clients of Telos is the US Department of Defense (DOD), indicating the company's involvement in high-security and critical infrastructure projects [1].

Financial Data and Key Metrics Changes - Total company revenue grew 11% sequentially to $26.4 million in Q4 2024, near the top end of the guidance range [9] - Adjusted EBITDA improved sequentially from a $4.2 million loss in Q3 to a $200,000 loss in Q4 [13][34] - GAAP gross margin expanded nearly 600 basis points year-over-year to 40.3%, while cash gross margin expanded nearly 900 basis points year-over-year to 47% [11] Business Line Data and Key Metrics Changes - Security solutions revenue grew 20% sequentially to $21.9 million, representing 83% of total company revenue [9] - Revenue from TSA PreCheck enrollments grew over 30% sequentially [9] - Secure Networks delivered $4.5 million of revenue, representing 17% of total company revenue, but declined sequentially as expected [10] Market Data and Key Metrics Changes - The TSA PreCheck program became the single largest program by revenue during 2024, with significant growth expected in 2025 [18] - The company increased its enrollment centers from 26 to 218 locations across the U.S. in 2024 [16] Company Strategy and Development Direction - The company is focusing on optimizing performance for customers and prioritizing task orders from existing contract vehicles due to delays in single awards [40] - The company aims to achieve a pro rata share of the TSA PreCheck enrollment market, targeting 500 locations by the end of 2025 [32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the new administration being generally positive for the company, despite delays in single awards [40] - The company expects to generate positive cash flow in Q1 2025 and significant improvements in revenue, profit, and cash flow for the full year [36][61] Other Important Information - The company anticipates revenue for the full year 2025 to be driven by existing business, TSA PreCheck, and new programs with DMDC and DHS [29][30] - The company is experiencing delays in government awards due to changes in administration but is not seeing similar delays on task orders [23] Q&A Session Summary Question: Impact of the change in administration on single award programs - Management noted that while the new administration is generally positive, single awards are being held back for review, leading to a focus on task orders from existing contracts [40] Question: Details on revenue recognition for DMDC and DHS programs - Management clarified that the mix of third-party content is shifting towards software, affecting revenue recognition timing, with a partial year of revenue expected in the first year [44][45] Question: TSA PreCheck revenue projections based on current rollout - Management confirmed that the framework for TSA PreCheck revenue is correct, with expectations for revenue to ramp as more locations open [51] Question: Cash flow expectations for Q1 and the full year - Management indicated that Q1 cash flow will benefit from working capital liquidation and expects positive free cash flow for the year, with breakeven adjusted EBITDA around $155 million to $160 million in revenue [54][55]

Revenue Performance - Revenue for the year ended December 31, 2024, was $108,272,000, a decrease of $37,106,000 compared to $145,378,000 in 2023, representing a decline of approximately 25.5%[205] - Revenue for the Security Solutions segment decreased by 1% in 2024 to $76.76 million, while gross profit decreased by 30% to $27.68 million, resulting in a gross margin decline from 51.2% to 36.1%[209][210] - Revenue for the Secure Networks segment decreased by 54% in 2024 to $31.51 million, with gross profit decreasing by 49% to $6.75 million, although gross margin improved from 19.6% to 21.4%[211][212] - Revenue from the federal government was $94,951,000 in 2024, making up 88% of total revenue, compared to $131,143,000 and 90% in 2023[379] - Revenue from state and local government and commercial customers was $13,321,000 in 2024, representing 12% of total revenue, compared to $14,235,000 and 10% in 2023[379] Profitability and Losses - Gross profit for 2024 was $34,429,000, down from $52,942,000 in 2023, resulting in a gross margin of 31.8%, compared to 36.4% in the previous year[205] - The company’s operating loss for 2024 was $55,873,000, compared to a loss of $40,315,000 in 2023, indicating increased operational challenges[205] - The net loss for 2024 was $52.52 million, with a net loss margin of 48.5%, compared to a net loss of $34.42 million and a margin of 23.7% in 2023[218] - Adjusted net loss for 2024 was $22.16 million, with an adjusted earnings per share of $(0.31), compared to an adjusted net loss of $15.61 million and an adjusted earnings per share of $(0.23) in 2023[221] - The company’s EBITDA for 2024 was $(44.01) million, representing an EBITDA margin of (40.6)%, compared to $(30.89) million and (21.3)% in 2023[218] Operating Expenses and Efficiency - The company’s operating expenses as a percentage of revenue increased to 83.4% in 2024 from 64.1% in 2023, indicating a rise in operational inefficiency[205] - Operating expenses decreased by 3% in 2024 compared to 2023, with research and development expenses down by $3.3 million and selling, general and administrative expenses down by $5.5 million[206] - Selling, general and administrative expenses were $75.5 million in 2024, slightly down from $81.0 million in 2023[276] Cash Flow and Liquidity - Net cash used in operating activities for 2024 was $(25.9) million, a decrease of $27.5 million compared to a net cash provided of $1.6 million in 2023[231] - Free cash flow for 2024 was $(39.7) million, compared to $(13.9) million in 2023[227] - As of December 31, 2024, the company had cash and cash equivalents of $54.6 million and working capital of $69.3 million[229] - Cash and cash equivalents dropped from $99,260,000 in 2023 to $54,578,000 in 2024, a decrease of about 45%[282] Backlog and Future Business - The company's backlog as of December 31, 2024, totaled $76,489,000, a decrease from $118,102,000 in 2023, with funded backlog at $51,197,000 and unfunded backlog at $25,292,000[203] - The company continues to face competitive bidding pressures for government contracts, with a majority of future business expected to be awarded through competitive processes[183] Restructuring and Impairments - The company incurred a restructuring charge of $1.3 million and a non-cash impairment of software development costs totaling $11.7 million in 2024[207] - An impairment loss of $6.4 million was recorded due to the abandonment of selected solutions, reported under operating expenses[353] - Total restructuring expenses and impairment loss for the year ended December 31, 2024, amounted to $7.643 million, compared to $1.132 million in 2023[354] Budget and Government Contracts - The proposed FY2025 budget includes $850 billion for the Department of Defense (DoD) base budget, with a focus on cyber investments and modernization of legacy technology[186] - The proposed FY2025 budget allocates $455 million for advancements in artificial intelligence, which aligns with the company's focus on cybersecurity and technology solutions[198] Accounting and Financial Reporting - The Company follows ASC Topic 606 for revenue recognition, utilizing a five-step model to determine performance obligations and transaction prices[361] - The company evaluates goodwill for impairment at least annually, with no significant adverse changes reported that would affect the fair value[319] - The company follows ASC 740 for income tax accounting, recognizing deferred tax assets and liabilities based on enacted statutory tax rates[334]

Telos Corporation (NASDAQ:TLS) Q4 2024 Earnings Conference Call March 10, 2025 9:00 AM ET Company Participants Allison Phillipp - Director Coporate Communications John Wood - Chairman and CEO Mark Benza - Executive Vice President and CFO Mark Griffin - Executive Vice President of Security Solutions Conference Call Participants Zach Cummins - B. Riley Securities Rudy Kessinger - D.A. Davidson Operator Good day and thank you for standing by. Welcome to the Telos Corporation Fourth Quarter 2024 Financial Resul ...

Fourth Quarter and Full Year 2024 Earnings March 10, 2025 DISCLAIMERS The information contained in this presentation does not constitute or form part of, and should not be construed as, any offer, sale or subscription of, or any invitation to offer, buy or subscribe for, any securities, nor shall there be any offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful. Telos Corporation (the "Company") will only make such an offer or sale pursuant to an effect ...

Group 1 - Telos Corporation reported a quarterly loss of $0.04 per share, better than the Zacks Consensus Estimate of a loss of $0.09, representing an earnings surprise of 55.56% [1] - The company posted revenues of $26.37 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 3.42%, but down from $41.06 million year-over-year [2] - Telos has surpassed consensus EPS estimates for four consecutive quarters [2] Group 2 - The stock has underperformed, losing about 16.1% since the beginning of the year compared to the S&P 500's decline of 1.9% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.07 on revenues of $31.52 million, and for the current fiscal year, it is -$0.14 on revenues of $150.13 million [7] - The Computers - IT Services industry, to which Telos belongs, is currently ranked in the top 22% of over 250 Zacks industries, indicating a favorable outlook [8]

Core Insights - Telos Corporation has released its fourth quarter and full year financial results for 2024 on its investor relations website [1] - A live webcast to discuss these financial results is scheduled for March 10, 2025, at 9:30 a.m. EST [2] - Related presentation materials and an archived webcast will be available on the company's website [3] Company Overview - Telos Corporation (NASDAQ:TLS) provides cybersecurity, cloud, and enterprise security solutions for highly security-conscious organizations [4] - The company's offerings include IT risk management, information security, cloud security, identity and access management, secure mobility, organizational messaging, and network management [4] - Telos serves a diverse clientele, including commercial enterprises, regulated industries, and government customers globally [4]

Revenue Performance - Revenue for Q4 2024 was $26.4 million, with $21.9 million (83.1%) from Security Solutions and $4.5 million (16.9%) from Secure Networks, meeting the top end of guidance [4]. - Sequential revenue growth of 10.9% from Q3 2024, driven by a 19.6% increase in Security Solutions due to a new program with DMDC and growth in TSA PreCheck enrollment locations, expanding to 218 locations with a target of 500 for FY 2025 [4]. - Total revenue for Q4 2024 was $26,372, a decrease of 35.7% compared to $41,059 in Q4 2023 [16]. - Revenue from Security Solutions increased to $21,921, up 6.1% from $20,652 in the same quarter last year [16]. - Q1 2025 guidance forecasts sequential revenue growth of 7% to 15%, with revenues expected between $28.2 million and $30.2 million, and positive cash flow [4]. Profitability and Margins - GAAP gross margin for Q4 was 40.3%, exceeding guidance, while cash gross margin was 47.0%, the highest since the company's IPO in 2020 [4]. - Full year GAAP gross margin was 31.8% and cash gross margin was 43.7%, the highest since 2000 [4]. - Gross profit for the three months ended December 31, 2024, was $10.62 million, with a margin of 40.3%, compared to $14.09 million and a margin of 34.3% in 2023 [27]. - Adjusted EBITDA for the year ended December 31, 2024, was $(9.62) million, with a margin of (8.9)%, compared to $(5.36) million and a margin of (3.7)% in 2023 [22]. - Cash gross profit for the year ended December 31, 2024, was $47.34 million, with a margin of 43.7%, compared to $57.39 million and a margin of 39.5% in 2023 [27]. Net Loss and Expenses - GAAP net loss for Q4 was $9.3 million, with an adjusted EBITDA loss of $0.2 million, also above the top end of guidance [4]. - Net loss for Q4 2024 was $9,330, compared to a net loss of $6,980 in Q4 2023, representing a 33.5% increase in losses [16]. - Operating loss for the year ended December 31, 2024, was $55,873, compared to $40,315 in 2023, reflecting a 38.5% increase in operating losses [16]. - The company reported a basic net loss per share of $0.73 for the year ended December 31, 2024, compared to $0.50 in 2023 [16]. - Free cash flow for the year ended December 31, 2024, was $(39.70) million, compared to $(13.89) million in 2023 [28]. Cash Flow and Working Capital - Cash flow from operations was a $10.5 million outflow, and free cash flow was a $14.8 million outflow, reflecting short-term working capital buildup [4]. - Cash flows from operating activities showed a net cash used of $25,938 for the year, compared to a net cash provided of $1,587 in 2023 [20]. - The company reported a net cash flow used in operating activities of $(10.52) million for the three months ended December 31, 2024, compared to $4.95 million in 2023 [28]. Assets and Liabilities - Cash and cash equivalents decreased to $54,578 as of December 31, 2024, down 45.0% from $99,260 in 2023 [18]. - Total assets decreased to $158,235, a decline of 24.2% from $208,699 in the previous year [18]. Research and Development - Research and development expenses for the year were $8,442, down 28.5% from $11,760 in 2023 [16]. - Total operating expenses for the year were $90,302, a slight decrease of 3.3% from $93,257 in 2023 [16]. Other Financial Metrics - Stock-based compensation expense for the three months ended December 31, 2024, was $7.39 million, representing 28.0% of total expenses, compared to $1.93 million and 4.7% in 2023 [24]. - The adjusted net loss for the three months ended December 31, 2024, was $(2.83) million, with an adjusted earnings per share of $(0.04), compared to $(6.46) million and $(0.09) in 2023 [26]. - The company incurred restructuring expenses of $(0.17) million for the three months ended December 31, 2024, compared to $(0.07) million in 2023 [26]. - The impairment loss on intangible assets for the year ended December 31, 2024, was $11.71 million, contributing to the overall financial performance [26].

Core Viewpoint - Telos Corporation will report its fourth quarter and full year 2024 financial results on March 10, 2025, and will host a webcast to discuss these results and the business outlook [1][2]. Group 1: Financial Reporting - The financial results for the fourth quarter and full year 2024 will be announced on March 10, 2025 [1]. - A webcast will be held at 9:30 a.m. ET to discuss the financial results and business outlook [1][2]. Group 2: Company Overview - Telos Corporation is a provider of cyber, cloud, and enterprise security solutions, focusing on security-conscious organizations [3]. - The company's offerings include cybersecurity solutions for IT risk management, cloud security solutions for compliance, and enterprise security solutions for identity and access management [3]. - Telos serves commercial enterprises, regulated industries, and government customers globally [3].